Australiawide Airlines Limited t/as Regional Express v Aspirion Pty Limited

Determination 12The Civil Procedure Act 2005, s 98(1), provides that subject to the rules of Court, and that, or any other, Act, costs are in the discretion of the Court. The discretion is broad but not unconfined. It is a judicial discretion to be exercised on a principled basis. 13Uniform Civil Procedure Rules 2005 ("UCPR"), r 42.1, provides that costs should follow the event, unless it appears to the Court that some other order should be made as to the whole, or any part, of the costs. 14UCPR 42.20(1) provides that if the Court makes an order for the dismissal of proceedings, then, unless the Court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed. 15The Succession Act does not contain any relevant provision to which s 98 would be subject. Thus, the effect of the Civil Procedure Act and the two rules to which I have referred, in this case, is that the Plaintiff must pay the first Defendant's costs, unless the court otherwise orders, and the court can only order otherwise if there is a discretionary decision to depart from what the rules provide: Australiawide Airlines Limited t/as Regional Express v Aspirion Pty Limited [2006] NSWCA 365 at [10]. 16In other words, the rules reflect the general proposition that an award of costs is discretionary, but, generally, the discretion is exercised in favour of the successful party: Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25]. 17So far as I am aware, there are no cases in New South Wales that have dealt with the costs of an unsuccessful application for a statutory will. 18There are some authorities, in other States, that have relevance to this particular type of costs application and to the general principles that might apply. 19In Boulton v Sanders [2004] VSCA 112; (2004) 9 VR 495, at 521 ([153]), Dodds-Streeton AJA (in whose judgment Ormiston and Charles JJA agreed), said that: "Where an application is brought by and for the benefit of persons including the applicant, rather than by a disinterested administrator, the ordinary principles governing costs in adversarial litigation properly apply. It should not be presumed that the estate, rather than an unsuccessful applicant, will be ordered to pay the costs of the proceeding merely because there is 'a fair case of dispute'." 20In Hoffmann v Waters [2007] SASC 273; (2007) 98 SASR 500, Debelle J said: "22 A number of competing considerations bear upon what order should be made as to costs on an application under s 7. Where a will already exists, the contending parties are either seeking a benefit from the estate or are seeking to protect an existing benefit from the estate under the existing will: Hill v Hill (No 2) [2001] VSC 135 at [9]. In such a case any order for costs might follow the event. In Victoria, costs followed the event in Hill v Hill (No 2) and in Boulton v Sanders (No 2) [2003] VSC 409. 23 In a case like the present, where no will exists and the will is proposed on behalf of a person who has never had testamentary capacity, a number of interests might properly be before the court. It is desirable that all relevant interests are before the court: re HMF (1976) Ch 33 at 38. I agree with Byrne J in Hill v Hill (No 2) at [10] that it would be a matter for regret if those persons were dissuaded from providing assistance to the court for fear that they might be obliged to do so at their own expense. 24 In England, subject to the overriding discretion of the court, the costs of a successful applicant and the cost of other interested parties are paid on a common fund basis out of the patient's estate. The costs of the Official Solicitor are paid on a solicitor and own client basis out of the patient's estate. This practice might be affected by the fact that the assets of a patient under the Mental Health Act 1983 (UK) are subject to the control of the court. 25 In my view, there is a strong argument that, since parties are seeking to advance individual interests, each party should bear his own costs. Such an order was made in Monger v Taylor . That consideration must be weighed against the fact that there is a public interest in a person being able to make a will so as to enable the orderly disposition of his assets on death. So, where the applicant is the guardian of the person who lacks testamentary capacity, there might be good reason to allow the applicant to recover his costs out of the estate of the person who lacked testamentary capacity. Another relevant factor is that the estate might be small or, as in this case, be intended to provide for the maintenance, well-being and support of the person who lacks testamentary capacity. In either case, it would be entirely inappropriate for the estate to be depleted by the costs of an application under s 7. Plainly, careful consideration must be given to the issue of costs. The order as to costs will depend upon the individual facts and circumstances of each case." 21In Re Keane; Mace v Malone (No. 2) [2011] QSC 98, in circumstances where the Plaintiff's proceedings had been dismissed, Daubney J concluded: "[5] I accept the Public Trustee's submissions in this regard. In practical terms, the benefit of success in this piece of litigation was and is for the respondent, who has protected their ultimate entitlement to receive Patrick's estate when he dies. There was, and is, no benefit for Patrick in this litigation. Moreover, I see no reason why the assets which are available to maintain Patrick in the nursing home should in any way be diminished by this spat between the competing camps in the family. [6] In my view, there is no reason to depart from the general rule as to costs." 22Also, I have considered whether other authorities relating to costs in Probate suits provide a relevant analogy. In this regard, it will be remembered that Powell J (as his Honour then was), in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, recorded the principles generally to be applied when determining how, in proceedings in the Probate Division, the Court's discretion as to costs is to be exercised. 23At pp 709-710, his Honour said: "Costs are, of course, in the discretion of the Court, but that discretion, being a judicial, and not an unfettered, one must be exercised in accordance with established principle. The general principle to be applied in adversary litigation is that costs follow the event, those costs being taxed on a party/party basis. However, over the years, a number of exceptions to this general rule have come to be recognised. In the field of probate litigation, two such exceptions have come to be recognised, they being:

1. Where the testator has, or those interested in residue have, been the cause of the litigation, the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate;
2. If the circumstances led reasonably to an investigation in regard to the document propounded, the costs may be left to be borne by those who respectively incurred them... To these exceptions to the general principle should, perhaps, be added the principle that, although a legal personal representative may be entitled to recover from a party to litigation costs only on a party/party basis, he, as a fiduciary, retains the right to an indemnity from the estate, and, thus, may have recourse to the estate for any difference between his costs on a trustee basis and the costs recovered from a party." 24Miller's Probate Practice (Maxwell: 1900 Ed) contains the following statement at pp. 438-439: "Two questions are to be considered with reference to an application for costs of the unsuccessful party:- (1) Was there reasonable ground for litigation? (2) Was it conducted bona fide? Where both these questions can be answered in the affirmative it is the usual practice of the Court, without having regard to the amount or the ownership of the property, to order the general costs to be paid out of the personal estate". 25Here, Jane did not cause the litigation. Her misfortune is that she is, and has been for some time, incapable of making a will. However, I was not satisfied that the statutory will proposed by the Plaintiff was, or was reasonably likely to be, one that would have been made by her if she had testamentary capacity. 26Nor does it seem to me, in the circumstances of this case, that an investigation in regard to a proposed statutory will was warranted. There was no evidence that Jane had ever said that she wished to make a will, in which she would exclude, completely, from provision either, or both, of the second and third Defendants. There was some evidence that she may have wished to ensure that the Plaintiff was adequately housed. But there was no evidence that he would not be, bearing in mind the current value of the provision made for him in the 1962 Will. 27It follows, that the answer to at least the first question posed in Paragraph 24 above cannot be in the affirmative. 28I have also considered the general principle, stated in Fairtlough v Fairtlough (1839) 1 Milw 36, in which it was said, at 39: "The principle of awarding costs out of the fund in testamentary cases is not confined merely to cases where the question arises upon the state in which the deceased has left his testamentary papers. The rule should be taken in a wider view, and wherever it is proper to specially bring the matter before the court for its opinion, the costs may be given out of the estate." 29In this case, Jane had a Will. It would appear that until 2007, she had opportunities to alter the 1962 Will. For example, in, or around 2000, she had retained solicitors to act for her in selling and buying real estate. Also, there were discussions between her, and others, about her testamentary wishes at different times before she lost capacity. These matters highlight the fact that if she had wished to, she could have revoked the 1962 Will and made a new Will. 30In these circumstances, I do not consider that she left her testamentary papers in such a state or that it was necessary to bring the matter before the Court. 31I have also considered the general view that in some cases involving a protected person, the court does not make a costs order or orders that costs are paid out of the estate. However, neither is a usual rule. The question of costs in protective matters is "What order is proper to be made": In re an Incapable Person D [1983] 2 NSWLR 590 at 595; Snelgrove v Swindells [2007] NSWSC 868 at [25]. 32In determining the burden of costs, I also bear in mind that the jurisdiction relied upon by the Plaintiff involves a public benefit, and imposing a liability for costs in the event that the Court does not accede to an application should not discourage its invocation. A disinterested applicant, who has real and genuine grounds for making an application for a statutory will, should not be deterred from taking that course by reason of a fear that, however genuine his, or her, case may be, he, or she, will have to bear the burden of costs. 33Yet, it is important to bear in mind the circumstances of the particular case. 34I do not accept the Plaintiff's submissions regarding senior counsel's conduct, or the criticism made of retaining senior counsel because he had been retained in other matters involving the Plaintiff and had acted for the second Defendant. I reject the first three arguments raised in the Plaintiff's submissions. 35As to the submission that related to whether senior counsel was necessary to be retained in this type of matter, that will, ultimately, be determined by an assessor on the assessment of the first Defendant's costs, if agreement cannot be reached by the parties. It may be said that the matter was not particularly complex, although it is one of the first contested applications brought for a statutory will in New South Wales. 36In any event, I note that the second Defendant, as the first Defendant's financial manager, sought, and obtained the approval of the NSW Trustee. Finally, Jane was joined as a party to the proceedings, and separately represented, pursuant to s 25 of the Succession Act . There had been no suggestion made by the Plaintiff that she was not a proper party. 37I also do not accept the submissions by the Plaintiff regarding informing the Court of the first Defendant's attitude to the alternative proposed statutory will. This was raised in an attempt to avoid a further dispute on Jane's death. 38Finally, I do not accept the submission that the Plaintiff did not cause the litigation. To the contrary, he brought the application seeking, not only a greater share, but all, of Jane's estate, on her death in the event he survived her. He had a personal financial interest in the outcome. He stood to benefit if the application was successful, but he did not lose if it was not, because he would remain a beneficiary named in the 1962 Will. He was not asserting a moral, or other, claim upon the bounty of the testatrix; he sought to establish and to give effect to what he said was, or was likely to be, her intention. He was far from a disinterested party. 39In seeking the whole of Jane's estate if he survived her, the proposed statutory Will was solely for his own benefit. 40Jane had an interest in defending the proceedings. Yet, no positive case was put forward on her behalf - the case was defended simply upon the basis that the matters necessary to be established to obtain the grant of leave had not been established. This was proper in all the circumstances of this case. 41The position of the second and third Defendants was slightly different. They were, at least in part, seeking to protect their expected benefit under a valid will that could not otherwise be revoked or altered because the testatrix lacked capacity. However, they do not seek costs. 42If no order for costs is made, then Jane's estate will be diminished. Even if a costs order is made, her estate will be diminished, but to a lesser extent. That her assets are sufficient to pay her own costs without any impact on her circumstances (as fairly conceded in submissions filed on her behalf) does not mean that she should bear the burden of costs. On its own, that it would not justify the order that the Plaintiff seeks. 43As Jane is still alive, "she is entitled to enjoy her assets undiminished by the burden of paying the costs of those whose claims anticipate her demise": Boulton v Sanders (No 2) [2003] VSC 409 at [2] (referring to Hill v Hill (No 2) [2001] VSC 135 at [8]). 44Whilst unrepresented, it cannot be said that the Plaintiff is an inexperienced litigant. I have previously dealt with a number of matters in which he has been involved. He ought to have been aware that he was at risk as to costs. 45The Plaintiff's application was, ultimately, found to be unmeritorious, leave to bring the proceedings not being granted. Taking into account the matters set out above and the other matters referred to in the written submissions, I am satisfied that this is a case where the unsuccessful Plaintiff should bear the burden of the first Defendant's costs of the proceedings, such costs to be calculated on the ordinary basis. To the extent there is a difference between the costs recovered and the first Defendant's costs calculated on the indemnity basis, that difference should be paid out of the first Defendant's estate. There will be no order as to the costs of the second and third Defendants. 46Order that the Exhibits be dealt with in accordance with the UCPR.

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